Education is unequivocally one of the most important and distinguishing accomplishments in preparation for a successful career. It’s also the most expensive. With the cost of education increasing at a more rapid rate than salaries, very few families can afford to send their children to college without incurring some degree of indebtedness. Recent national studies have found that the average student loan debt per person is $31,172.00. U.S. student loan debt topped $1.49 trillion just after the start of 2019, saddling graduates with an average monthly payment of just under $400. It will take graduates an estimated 10 to 30 years to eradicate student loan debt unless drastic measures are taken. Parents and high school graduates are finding how to pay for college to be an incredibly arduous endeavor. More and more students have had to rely on college loans to fund their schooling. Follow these tips to learn how to escape student loan debt hell.
Escaping Student Loan Debt
If you find yourself buried under a mountain of student loan debt, don’t despair. There are steps that can be taken to escape the crushing weight of debt in less time. Although a consistent concerted effort is generally the key to paying off debt; there are student loan debt programs that can help to eradicate debt faster.
Student Loan Forgiveness Programs
If you have federal student loans, you may be eligible to receive loan forgiveness or a loan discharge. Student loan forgiveness programs are available to state certified teachers in low-income areas, those working at a 501 (c)(3) non-profit organization, and government employees. To be considered, borrowers are required to maintain their qualifying position and make 10 years or 120 on time payments while enrolled in an income-based repayment plan. After 120 payments, the rest of your student loan debt payments can be forgiven.
For those not fortunate enough to qualify for loan forgiveness, there are still options at your disposal to minimize your interest payments and expedite your emancipation from student loan debt.
Student Loan Consolidation
Student loan consolidation is a viable option for most debtors. Depending upon your credit rating, it is very possible that you will be able to refinance your loan with a private lender at a lower interest rate. The odds become increasingly better to find private lenders with lower rates in the case of a Parent Plus Loan. Unlike student loans, Parent Plus Loans list the parent as the borrower for dependent students. Plus Loans are often used to cover the difference between the maximum loan amount offered to the student and the cost of tuition and fees. Since students are capped as to the amount that they can borrow annually from the federal loan program, parents can qualify for a federal loan to cover the outstanding balance.
Plus Loans carry a higher interest rate than traditional federally funded student loans. The 2019-2020 Plus Loan interest rate is 7.08%. Every parent that qualifies for a Plus Loan pays the same set interest rate. However, that interest rate can be reduced by refinancing the loan. The initial loan doesn’t allow borrowers to take advantage of a high income or good payment history. Both of these factors are considered when refinancing a Plus Loan with a private lender. Private lender refinancing rates are about half of the rate offered by the federal Plus Loan program. Reducing the interest payment on a student loan is a great starting point for getting out of debt fast.
Making additional payments to directly attack the principal is imperative if you want to pay off debt faster. Consider allocating wage increases, bonuses, tax refunds and part time work income to college debt reduction. Although it takes time, your consistent concerted effort will eventually help you to escape student loan debt. Remember that slow and steady wins the race.